Joe Springer's  Instablog

The Street's Adam Feuerstein's latest attack on MannKind (MNKD) makes several "scary"claims:

1. We should be scared because MannKind is running a study to clear Afrezza for use on people with Mild Obstructive Pulmonary Disease
2. A 2008 study had a high drop-out rate
3. Afrezza caused depressed lung function over a two year period

Let's balance that out:

1) Afrezza could be cleared for people with Mild Obstructive Pulmonary Disease, good! The current studies are for people who do not have "History of COPD, asthma, or any other clinically important pulmonary disease," this could open Afrezza up to these people.

2) In 2008 everyone was scared of inhalable insulin because of Exubera. CEO Alfred Mann at the January JP Morgan Healthcare conference:

One of the greatest drug failures in history was the Pfizer attempt to do this some years ago with Exubera. After that failure, when they asked the question in 2008 to the physicians at the American Diabetes Association meeting only 28% of the people felt they would ever use an inhaled insulin. A year later, when people began to learn that we are not just an inhaled insulin but a new form of insulin that has tremendous physiologic benefits, the number had risen to 48%, and then in 2010 they asked the question again, and by now people were beginning to understand the significance of Afrezza, and now 95% of the physicians said they would use Afrezza in their practice. They stopped asking that question since it was so overwhelming after that.

If your own doctor would not even consider inhalable insulin in the wake of Exubera are we supposed to be surprised that patients dropped out?

3) Dr. Mann at that same conference:

We also see a very tiny reduction in pulmonary function, you know like a, maybe a 1.5% reduction. That reduction, by the way, is comparable to what you see in the other cohort, the conventional cohort. It's the reduction you get in about 4 months of life, so it's hardly significant. The FDA set as a goal that we don't include patients who have below standard pulmonary function of 30%, we're talking 1.5%, it's a not a big deal, the FDA is not concerned, nobody seems to be concerned. And by the way it's probably just a reaction to the inhalation of the powder before you do the test because once you stop taking Afrezza the 1.5% is restored, so it's really not an issue.

There will almost certainly be more "scary" articles about Afrezza. It is important to realize that institutions do not pay people to write glowing articles about a stock before they buy it. They do the opposite.

Disclosure: I am long MNKD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am writing an article on Hydrogenics (HYGS), it is a mammoth bargain on its way much higher. That's what I think. I want to address any risks. If you can find something wrong with this stock please say so now so I can address it.

Disclosure: I am long HYGS.

Email joespringernews@gmail.com to be added to my free newsletter, I sent this out on Thursday:

I wanted to give you a heads up that I'm researching a stock for an in-depth article - Hydrogenics (HYGS). It will probably be several weeks until I publish the article, but the stock is not liquid so I wanted to tell you now in case you are interested.

Hydrogenics is close to profitability now, and may be profitable in Q1 2013 depending on how orders are recognized, they have $16 million cash and a very sizable backlog, they are healthy and the excitement seems about to start.

HYGS has three businesses:

-they are a leading supplier of on-site Hydrogen generation for all sorts of industrial and fueling purposes

-they have a fuel cell business for propulsion and backup power for cell towers - they just got a $90 million propulsion order

-and the most exciting business is that they do energy storage from renewable sources. The idea is that a windmill spinning at 4 am is wasted, no other way of storing the energy can scale for use at utilities. What they do is use the energy from the windmill to split water into hydrogen and oxygen, and then they take that hydrogen and inject it directly into the natural gas system. They already are doing it in Germany where they have won 4 of the 6 contracts awarded, they are competing for 12 more there currently. They have interest elsewhere in Europe and Japan, and Enbridge - the largest distributor of natural gas in North America - recently partnered with HYGS and took an ownership stake. This is a $10 - $50 billion market.

Here is the presentation from the latest conference call:

http://www.hydrogenics.com/assets/pdfs/2012.Q4.Presentation.pdf

The CEO's latest presentation:

http://wsw.com/webcast/roth27/hygs/

And their site:

http://www.hydrogenics.com/

This is an exciting play on the Hydrogen economy, and I like it quite a bit. Remember this is not a liquid stock: if there is not an eager buying/selling counter-party when you want to get in or out you may not get a good price. That same phenomenon can work to your advantage though - if you are long and an institution wants to get long, you will enjoy a nice ride up.

My last two articles worked very well, TA has doubled and MNKD put on close to half a billion dollars market cap:

http://seekingalpha.com/article/1106981-3-reasons-travelcenters-of-america-could-triple

http://seekingalpha.com/article/1254581-5-reasons-mannkind-could-be-the-best-performing-stock-of-2013

Please do your due diligence on this if you like it, I like it but there are no guarantees.

Success to trade,

Joe

Disclosure: I am long HYGS, MNKD.